It would have been utterly disastrous if there had been any other outcome.

Because – for the avoidance of any doubt – the ECB is taking a substantial reputational and financial risk in buying the debt of these nations: many will see the ECB as taking a serious credit risk in bailing out two financially over-stretched governments and as behaving contrary to the rules of prudent central banking.

But, for now, investors and creditors care most that someone – anyone – is buying Spanish and Italian government debt. And they’re not desperately worried by the long-term risk that confidence in the intrinsic value of the European currency could be undermined by the conversion of government debt shunned by commercial investors into cash.

Analysts gave a mixed reaction to the ECB’s move, and said the markets would be hoping to see more action from European policymakers.

“The markets are looking for a concrete plan out of Europe and the US in terms of how they are going to deal with their deficits and those plans need to be implemented,” said Richard Hunter at broker Hargreaves Lansdown.

“Until the market can get comfort on these matters, there is going to be more volatility.”

The intervention by the ECB is seen as a short-term measure to help calm stock markets, but what investors want to see most of all is highly-indebted countries reducing their levels of debt, by spending less and raising more in revenues.

Here is the relevant statistic. Over the next five years, Italy has to borrow more than 500 billion euros, simply to repay existing debt that is set to mature. On top of that, Italy will have to borrow more to finance its deficit, the gap between tax revenues and spending.

To put it another way, Italy’s potential financing requirements on its own would exhaust the resource of the EFSF, based on its current size, if investors were to shun Italy altogether.

That is why investors see any purchases by the European Central Bank of Spanish and Italian debt as – at best – a sticking plaster. ECB purchases would not provide long-term sustainable demand for Spanish and Italian bonds.

The sticking plaster is only useful if it gives Italy and Spain sufficient time to persuade the markets that they have their deficits on a sustainable downward trend and their public finances are being properly fixed.

But if in the coming weeks Italy and Spain fail to do that, declining confidence in their ability to repay their debts will look even more like a potentially mortal wound for the eurozone.

Merkel returned from the Dolomites to Berlin over the weekend but is remaining on holidays, ostensibly not to scare markets, even if she is spending hours on the phone.

As far as she is concerned, the measures agreed at the EU’s summit on July 21st – to be ratified by national parliaments next month – are enough to guarantee the euro’s future.

Everybody involved has an interest in making sure that what was agreed is enough, said one finance ministry official yesterday. “The markets, too, have to have an interest that we pull through,” said the official.

In addition, Merkel and French president Nicolas Sarkozy (pictured together above) have promised “extremely ambitious” proposals to transform the European Stability Mechanism – the post-2013 successor to the current European Financial Stability Facility (EFSF) – into a European Monetary Fund with robust powers of national budgetary oversight.

Until then, Germany is determined to face down calls to enlarge the size of the EFSF for Italy or anyone else, fearing the euro zone’s rescue ring would start to sink.

“Any increase in size would only be an invitation to speculators to find out how much the euro zone is still prepared to give,” one senior unnamed official told Der Spiegel magazine. And the official had a warning to Rome: “An economy like Italy’s cannot be supported” by the EFSF.

And what of the eurobond? Even mentioning the word prompts a bad-tempered reaction in Berlin. German politicians fear such an idea would be a tough, if not impossible, sell to their voters, particularly if it weakened the reform zeal of struggling euro-zone neighbours.

“We don’t think much of any plans to socialise European debts, particularly as Germany is one of the few countries who would have to carry such a guarantee,” said Horst Seehofer, head of Merkel’s Bavarian coalition partner, the Christian Social Union, last night.

Herein lies the major dilemma – particularly for Germany. It looks at countries like Greece, Italy and, to a lesser extent, Spain, and asks: If it is to guarantee their debt, how could it ensure that the old practices – the failure to collect tax, the excessive regulation, the resistance to change – would not just prove a drain on the German economy?

It is certainly true that Europe’s leaders have failed to tell their electorates the scale of the change that will be required. The public sector will have to be slashed. Spending on a whole range of desirable projects will be cut. The old Europe, so attached to its social welfare programmes, faces an uncomfortable decade. To bring in such unsettling change requires credibility – and many leaders like Berlusconi don’t have it.

In the end Europe faces a stark choice: to force some of the weaker countries out of the eurozone or for the stronger countries to assume responsibility for the bloc’s debts as a whole.

From the sidelines, many voices say that the answer to all of this is to launch a eurobond that would essentially turn national debts into common European debt. Borrowing costs for weaker nations would come down because their debt would have countries like Germany behind it.

Phillip Souta of the research group Business for New Europe says: “Germany and other creditor eurozone members can break this vicious cycle by agreeing to the joint and several guarantee of a eurobond.” The German Institute for Economic Research reckons a eurobond would cost Germany 15 billion euros a year.

In order to get close to selling this idea to the German public, the weaker countries would have to agree to a massive loss of sovereignty. Germany, France, Austria, Finland etc (the creditor countries) would essentially want to manage the tax and spending of countries like Greece and Italy.

We are not at that point, but the history of this crisis is the speed at which the unimaginable comes to be accepted.

So far leadership in the eurozone – from Merkel to Berlusconi and from Jean-Claude Trichet, boss of the ECB, to José Manuel Barroso, president of the European Commission – has fallen woefully short. They have emerged as leaders who do not lead and are only ever forced to act at the 11th hour.

Now is the time. It is in no one’s interest for a disorderly collapse of the euro. It is time for the leaders of Europe, the ECB and the EFSF to get ahead of the markets. But that will not be the endgame.

Once stability is achieved, and in order to ensure that the euro has a future that cannot be doubted, leaders will need to confront far bigger issues. Either a mechanism has to be found to allow a two-speed Europe where the countries of the periphery are not hobbled by an exchange rate that is totally inappropriate for their economic wellbeing, or the eurozone must consider political union where the more prosperous areas routinely help the less well-off. The United States of Europe is probably the only true long-term solution.